HK Future
It looks as though Hong Kong may be in for another bout of “Whatever happens to us in _” only with 2047 replacing 1997. I say this after attending the farewell presentation by the city’s most famous activist investor David Webb at the Foreign Correspondents Club last week.
Webb is a legend in local media and business circles and rightly so. For many years he has worked on a pro bono basis to improve public knowledge of business issues. Towards the end of his fireside chat Webb queried what legal system would apply in Hong Kong after 2047 and whether our law students should be continuing to study the existing system or should start to become proficient in mainland law. He referred in particular to contract law and land leases.
My immediate reaction was: please let’s not go through all this again. I have dealt with the subject several times over the years, most recently in 2019. Half a century ago, I was an alarmist, now I urge everyone to keep calm.
When I first arrived in Hong Kong in the early 1970s, almost nobody expressed concern about 1997. Received wisdom at the time was that the date was irrelevant as the Beijing government had expressly disowned all the unequal treaties signed with foreign powers in the 19th century. China was ignoring the deadline, so it was safe for Hongkongers to do the same.
I was never really convinced by that argument, for two reasons. The first concerned the relevant treaties. Britain was sticking to the terms of the two which gave it control over Hong Kong Island and urban Kowloon in perpetuity. It followed then that for consistency’s sake it had itself to abide by the terms of the 1898 lease of the New Territories.The British would have to offer it up when the lease expired.
The second reason concerned borrowing for property purchase. Hong Kong was moving towards 20-year mortgages which simply did not work for properties north of Boundary Street. Bank managers are by nature cautious people and I couldn’t see them making big loans to buy on land the ultimate control over which would shortly be in question.
So I urged anyone who would listen to address the issue, but there were few takers.
But by the late 1970s the pendulum had swung the other way and there started to be a lot of speculation about 1997. Whatever merits the various arguments had were in any event soon rendered irrelevant because they were overtaken by events. Britain did raise the issue of lease expiry and Deng Xiaoping’s creative solution was to amend the Chinese constitution to provide, under a new Article 31, for the creation of special administrative regions.
Britain and China then thrashed out the future of Hong Kong which led to an international agreement known as the Joint Declaration which came into effect in 1985. The JD in turn led to the drafting of Hong Kong’s Basic Law setting out how China would administer the territory after the handover. The Law was promulgated in 1990 and came into force on 1 July 1997.
So for over a decade all the 1997 questions faded away; we knew what would happen, it was all there in black and white.
But this being Hong Kong matters did not rest there. Sure enough from time to time the 2047 issue was raised and I found myself writing about it tangentially in 2016 and 2018. The big explosion came in 2019 when a retired justice of the Court of Final Appeal Henry Litton wrote a book entitled “Is the HK Judiciary sleepwalking to 2047” and gave several high-profile speeches to promote it. He argued that the judiciary needed to prepare for when mainland law would prevail.
Around the same time some young people argued the Basic Law expired in 2047 and began to demand a say on post-2047 governance. They wanted a referendum on the different options, one of which would be independence.
I think memories of what happened next are still relatively fresh so I won’t belabour them. But it is worth restating the main points. First and most important the Basic Law has no expiry date, in particular Article 1 which makes clear the Hong Kong SAR is an inalienable part of the People’s Republic of China. While it is correct that one provision (Article 5) has an implied expiry date because it speaks of 50 years unchanged, it does not state what happens next, nor does any other provision include a similar caveat. There is no sunset clause so as with any other law passed by a legislature the law is deemed to remain current until amended or repealed. So all the assurances on legal system, separate currency etc remain.
Specifically on property, almost all land sales by the government since 1997 have been on the basis of a 50-year lease starting from a current date (the only exception being Hong Kong Disneyland which has a 100-year lease starting from 1999). Many leases will not expire in 2047, but some will. We found a simple way of addressing the same problem in the run-up to1997, a single piece of legislation to extend them all for 50 years.
Just in case some doubt lingers, in his speech during his visit on 1 July 2022, President Xi Jinping emphasised that one country two systems was here to stay because it brought benefits to China. He made specific mention of the common law legal system. Which brings us to the present day. While I was prepared to argue with a senior judge over legal interpretation, I am not prepared to argue with Webb about sentiment in the business community. If he feels there is doubt, then maybe we should bring forward the draft of the 2047 lease extension legislation soon. Let us dispel any doubts before they take root.